Sign up to receive free email alerts when patent applications with chosen keywords are publishedSIGN UP

Abstract:

A system for identifying and expediting the release of held items, such as
checks. Paying banks (having accounts against which the checks are drawn)
provide paid item files to the system, and depository banks (where checks
have been deposited) provide held item files to the system. If there is a
match of a paid item file and held item file (indicating that a held
check has been paid by the paying bank), the depository bank is notified
that the item has been paid and that the hold may be released.

Claims:

1. A system for releasing a hold on payment of an item to a customer,
wherein the hold is placed on the item by a receiving entity, and wherein
the item is to be paid to the receiving entity by a paying entity, the
system comprising:a memory for storing data that represents held items on
which holds have been placed by a receiving entity and for storing data
that represents paid items which have been paid by a paying entity; anda
management system for comparing the stored data representing held items
and the stored data representing paid items, in order to identify any
held item that has been paid, so that the receiving entity can be
notified of such identified item and release the hold.

2. The system of claim 1, wherein the item is a negotiable instrument.

3. The system of claim 2, wherein the negotiable instrument is a check.

4. The system of claim 3, wherein the paying entity is a paying bank
maintaining an account against which the check has been drawn.

5. The system of claim 4, wherein the receiving entity is a depository
bank maintaining an account into which the check is being deposited.

6. The system of claim 5, wherein the memory is a database system for
periodically receiving and storing paid item files, each paid item file
containing data corresponding to a held item, and for periodically
receiving and storing held item files, each held item file containing
data corresponding to a paid item.

7. The system of claim 6, wherein the database further stores a paid
confirmation file containing data corresponding to any held item that has
been paid, and wherein the management system sends such paid confirmation
file to the depository bank which has put a hold on that item.

8. The system of claim 7, wherein each paid item file, held item file and
paid confirmation file comprises fields for at least a bank ID, an
account number and a check serial number.

9. The system of claim 8, wherein the paying bank provides a plurality of
daily paid item files, each representing an item that has been paid by
the paying bank during one day.

10. The system of claim 9, wherein the depository bank provides a
plurality of daily held item files, each representing an item on which a
hold has been placed by the paying bank during one day.

11. The system of claim 8, wherein each paid item file further comprises a
field for a paid date, and wherein the bank ID identifies the paying
bank.

12. The system of claim 8, wherein each held item file further comprises
fields for a deposit date, a hold expiration date, and a depository ID,
wherein the bank ID identifies the paying bank, and wherein the
depository ID identifies the depository bank.

13. The system of claim 8, wherein each paid confirmation file further
comprises fields for a depository ID and a paid marker bit, wherein the
depository ID identifies the depository bank and wherein the paid marker
bit identifies the item as paid by the paying bank.

14. The system of claim 8, wherein the management system compares the bank
ID, account number and serial number of the paid item files and held item
files.

15. The system of claim 14, wherein each paid item file and held item file
further comprises a field for the amount of the check, and wherein, if
the field for the check serial number is not populated with data, the
management system compares the amount in the held item files and paid
item files to determine if there is a match.

16. The system of claim 5, wherein, if a held item is identified as having
been paid by the management system, any paid item file and held item file
corresponding to that item is deleted from the memory.

17. The system of claim 1, wherein the receiving entity is a commercial
entity having an account for the customer, and wherein the item is made
in payment on such account.

18. The system of claim 17, wherein the commercial entity is a credit card
company.

19. A method for releasing a hold on crediting of a payment item to an
account of a customer, wherein the hold is placed on the item by a
receiving entity that receives the item from the customer in order to
assure payment to the receiving entity by a paying entity, the system
comprising:receiving held item files from multiple receiving entities,
wherein each held item file represents an item on which a hold has been
placed by a receiving entity;receiving paid item files from multiple
paying entities, wherein each paid item file represents an item which has
been paid by a paying entity;comparing the held item files to the paid
item files; andnotifying a receiving entity if a held item file received
from that entity matches a paid item file.

20. The method of claim 19, wherein the payment item is a check.

21. The method of claim 20, wherein the paying entity is a paying bank
maintaining an account against which the check has been drawn.

22. The method of claim 20, wherein receiving entity is a depository bank
maintaining an account into which the check is being deposited.

23. The method of claim 20, wherein the receiving entity is a commercial
entity having an account for the customer, and wherein the item is made
in payment on such account.

24. A method for expediting the release of a hold on a item presented by a
customer for credit to an account maintained by a receiving entity for
the customer, wherein the hold has been placed by the receiving entity
and wherein the item is to be paid to the receiving entity by a paying
entity, the method comprising:providing a paid item identifying system
that is operated by a third party;receiving, at the identifying system,
held item files from multiple receiving entities representing items on
which holds have been placed by those receiving entities;receiving, at
the identifying system, paid item files from multiple paying entities
representing items which have been paid by the those paying
entities;comparing, at the identifying system, the received held item
files to the received paid item files, in order to determine if any item
represented by a held item file has been paid; andnotifying a receiving
entity if a held item from that receiving entity has been paid, so that
the hold on such item may be released.

25. The method of claim 24, wherein the third party operates independently
of at least one of the multiple receiving entities and multiple paying
entities.

Description:

CROSS-REFERENCES TO RELATED APPLICATIONS

[0001]Not Applicable

STATEMENT AS TO RIGHTS TO INVENTIONS MADE UNDER FEDERALLY SPONSORED
RESEARCH OR DEVELOPMENT

[0002]Not Applicable

REFERENCE TO A "SEQUENCE LISTING," A TABLE, OR A COMPUTER PROGRAM LISTING
APPENDIX SUBMITTED ON A COMPACT DISK.

[0003]Not Applicable

BACKGROUND OF THE INVENTION

[0004]It is common for banks and other financial institutions to place
holds on checks when presented for deposit by customers, to allow
sufficient time for the checks to clear at the paying bank. While such
holds are typically for a short, fixed period of time (e.g., a few
business days), in some cases a depository bank (the payee's bank) may
require a longer hold, such as for a new customer or a customer without
good credit. While such banking practices may be prudent to reduce the
risk from bad or fraudulent checks, they lead to frustration when
customers are not able to use the funds until the hold expires.

[0005]Usually, the release of funds for held checks is based on the period
of the hold rather that the actual clearing of the check and transfer of
funds from the paying bank to the depository bank. In some instances, the
check may clear and be paid quickly to the depository bank, but since the
hold is for a fixed period of time, the paid funds are not made available
to the customer. Typically, the depository bank only knows the actual
status of the check if it is returned with an insufficient funds or
similar notice from the paying bank. Otherwise, it is assumed to have
cleared after a specified period from the time of presentment (to the
paying bank). Thus, in some cases where a check has cleared, the
depository bank may have the funds from the paid check for several days
before funds are attributed to and made available to the customer.

BRIEF SUMMARY OF THE INVENTION

[0006]There is provided, in accordance with embodiments of the present
invention, a system and method for expediting the release of held checks
and similar items.

[0007]In one embodiment, the system includes a memory for storing data
that represents held items (checks) on which holds have been placed by a
receiving entity (e.g., depository bank) and for storing data that
identifies paid items which have been paid by a paying entity (e.g.,
paying bank). The system also includes a management system for comparing
held items and paid items, and for identifying any held item that has
been paid, so that the receiving entity can be notified of such
identified item and release the hold.

[0008]A more complete understanding of the present invention may be
derived by referring to the detailed description of the invention and to
the claims, when considered in connection with the Figures.

BRIEF DESCRIPTION OF THE DRAWINGS

[0009]FIG. 1 is a general block diagram showing an item identifying system
for identifying paid checks.

[0010]FIGS. 2A, 2B and 2C illustrate the content of paid and held item
files sent to the item identifying system of FIG. 1, and the content of a
paid confirmation file sent from the identifying system to a depository
bank.

[0011]FIG. 3 is a flow diagram illustrating the operation of the item
identifying system.

DETAILED DESCRIPTION OF THE INVENTION

[0012]There are various embodiments and configurations for implementing
the present invention. Generally, embodiments provide systems and methods
for identifying a held item (e.g., check) that has been paid by a bank or
other paying entity, in order to expedite release of the held item.

[0013]In one embodiment, a paid item identifying system is provided for
receiving files representing held items (checks) from a depository bank
(the bank where a payee has presented items for deposit). The identifying
system also receives files representing paid items from paying banks (the
banks maintaining accounts on which checks have been drawn). The
identifying system uses the files to periodically compare each paid item
to each held item, and to notify the depository bank if a held item has
been paid.

[0014]For convenience, the term "item" is used herein to refer not only to
checks, but also more broadly to any negotiable instrument, share draft,
negotiable order of withdrawal, or other item which may have payment or
credit withheld to assure actual payment by a paying bank or similar
paying entity.

[0015]Referring now to FIG. 1, there is illustrated a paid item
identifying system 100. The system 100 includes a management or
processing system 110 and a memory or database 120. As illustrated
diagrammatically in FIG. 1, database 120 has a storage area 130 for
receiving and storing daily paid item files or records 132 received from
paying banks 134 (i.e., banks against which checks have been drawn) and a
storage area 140 for receiving and storing daily hold item files or
records 142 received from depository banks 144 (i.e., banks receiving
checks for deposit, and placing a hold until such checks clear). In the
illustrated embodiment, the identifying system 100 is operated by a third
party that operates independently of the paying banks or the depository
banks, although in some embodiments the operator of the identifying
system may be affiliated with one or more of the banks.

[0016]As illustrated in FIG. 1, and as will be described in greater detail
below, management system 110 generates or builds paid confirmation files
or records 152 in response to comparison of the files 132 and 142 that
are stored in database 120. A paid confirmation file 152 for a specific
check is created only if a paid item (represented by one of paid item
files 132 stored within database 120) matches a held item (represented by
one of the held item files 142 stored within database 120). The paid
confirmation files 152 are stored in storage area 150 of database 120,
and are periodically provided to depository banks 144. More specifically,
each paid confirmation file corresponding to a check for which one of the
depository banks 144 has provided a held item file, is returned to the
depository bank which has placed a hold on the check.

[0017]Referring now to FIGS. 2A through 2C, there are illustrated data
fields within each of the files or records 132, 142 and 152. As seen in
FIG. 2A, each paid item file 132 is associated with one check and
includes a Bank ID (the eight digit routing number identifying the paying
bank ), an Account Number for the account on which the check is drawn
(typically ten digits), a Serial Number (typically three to five digits
representing the check number), the Amount of the check, and a Paid Date
(the date the check has been paid, i.e., funds for the check has been
transferred by the paying bank to the depository bank). As seen in FIG.
2B, each held item file 142 includes the same information as the paid
item file 132 (Bank ID, Account Number, Serial Number, Amount), but also
additional fields for a Depository ID (routing number of the depository
bank), a Deposit Date (the date the check has been deposited by the payee
at the depository bank), and a Hold Expiration Date (the date that the
depository bank will automatically release the hold). As seen in FIG. 2c,
each paid confirmation file 152 includes a Bank ID, Account Number,
Serial Number, Amount, Depository ID, and a Paid marker bit (Y/N)
indicating whether the item has in fact been paid. As should be apparent,
the Paid marker bit is marked as paid ("Y") and the paid confirmation
file sent to the depository bank 144 only if the identified check has in
fact been paid by the paying bank (as evidenced by receipt of a paid item
file 132 corresponding to the check).

[0018]FIG. 3 illustrates a process for identifying and confirming paid
items, with programmed steps executed by management system 110 within
system 1 00. As seen, system 100 first receives both daily paid item
files from paying banks 134 and daily hold item files from depository
banks 144. Such files are stored at database 120 (storage areas 130 and
140). Periodically, at step 312, the management system 110 takes each
paid item file 132 (as illustrated in FIG. 2A) and compares it to each
held item file 142 (as illustrated in FIG. 2B). In one embodiment, such
comparison occurs once daily, but it should be appreciated that the
frequency could be based on the specific needs or desires of the parties
involved. Alternatively, the comparison could be made on a real time
basis, at the time each paid item file is received and stored within
system 100. The initial comparison of items at step 312 uses the bank ID,
account number, and serial number fields.

[0019]If there is match of a paid item file to a held item file (step
314), then a paid confirmation file 152 (FIG. 2c) for the corresponding
check is created and stored within database 120 (step 320), and then sent
to the depository bank (step 322) that placed the hold on the check. If
there is no match at step 314, management system 110 conducts a second
comparison of paid item files and held items files for matches of bank ID
and account numbers and amounts (step 330). This last mention step looks
for items where a serial number is not present in the file. As will be
appreciated by those familiar with check processing, depending on the
systems and processes involved in processing checks, in some cases the
electronic records for processed checks do not capture serial numbers,
but a match of an account number and amount would likely identify those
items (without serial numbers) that have been paid. While it is highly
unlikely that two different held items would have the same account number
and amount, and also be paid on the same or on very close dates, the
system 100 could alert a person or employee associated with the
identifying system 100 that a match has occurred for multiple items, and
an inspection (manual or automated) could be initiated to confirm that
the paid item and held item are in fact the same. The inspection could
include checking for proximity of deposit and paid dates for other held
or paid items having the same amount.

[0020]If there is a match for account number and amount (step 332), then a
paid confirmation file 152 is created and sent to the depository bank
(steps 320, 322). If there is no match at step 322, then the process ends
(until resumed for newly received paid item files or held item files).

[0021]If there has been a match (steps 314 or 332), and a paid
confirmation file sent to the depository bank, then that item has its
corresponding paid item file 132 and held item file 142 within database
120 deleted or archived (step 340), since they are no longer needed for
comparison. As should be appreciated, if there is no match, the held item
files continue to be maintained within database 120, for subsequent
comparison with later received paid item files. Matched files that are
deleted may be archived elsewhere within database 120 or archived at a
different storage location.

[0022]Typically a paid item file 132 will not need to be kept once that
file has been compared to each of the held item files for a match, since
paid item files will normally be received several days after a
corresponding held item file for the same check. If there is no match, it
is unlikely a hold is in place for that paid item. However, the system
100 may be programmed to keep paid item files active for a short period
of time and continue to periodically compare them to newly received held
item files, in the event a depository bank has been delayed and has not
sent held item files immediately after receiving and placing a hold on
checks.

[0023]A held item file 142 will normally be kept in database 120 for at
least several days after received, since depending on the delay in
payment, it may be several days before the corresponding paid item file
132 is provided by the paying bank. On the date the hold expires (as
reflected in the Hold Expiration Date field 142 (FIG. 2B)), the hold item
file can be automatically deleted or archived, since there is no further
need for it in identifying held items for release.

[0025]While the system 100 is described as one for identifying paid checks
to depository banks, it should be appreciated that the present invention
could also be employed in other environments. A vendor, merchant, credit
card company or other commercial entity to whom payments are made by
check may restrict activity on an account until the check clears, and
such an entity may experience lost revenue as a result. As one example, a
credit card company may establish a credit limit that is not fully
available while payments made by a customer are pending, and a system
such as that described herein can be used to more quickly restore the
credit limit for use by the customer in making further purchases (i.e.,
even if the check has not been fully processed by the credit card
company's own bank). In such a case, the system 100 could be used to
provide a paid item confirmation to the credit card company in response
to matches of held item files (from the credit card company, representing
payment checks received by the credit card company) and paid item files
(from paying banks, representing checks that have been paid by those
banks).

[0026]Further, the data fields within the paid item files 132, held item
files 142 and paid confirmation files 152 are illustrative only, and they
may contain more, less or different data than that seen. Generally, such
fields will depend on the nature of the items being processed and the
nature of data needed to properly identify and make comparisons of held
items and paid items.

[0027]Thus, while a detailed description of presently preferred
embodiments of the invention has been given above, various alternatives,
modifications, and equivalents will be apparent to those skilled in the
art without varying from the spirit of the invention. Therefore, the
above description should not be taken as limiting the scope of the
invention, which is defined by the appended claims.